Do Corporate Credit Conditions Alter Labor Market Dynamics? A SVAR Analysis in a Transatlantic Perspective

The purpose of this paper is to establish the eects of credit and technological shocks on unemployment and vacancies in United-States and Germany. A structural VAR methodology is used in a macro-econometric setting to achieve this. Shocks are identied based on the assumption that working capital is paid in advance of production as it is assumed in various theoretical papers. The results show that technological shocks have a positive impact on employment and vacancies in both countries, with a larger impact in United-States than in Germany. Credit shocks appear to aect dierently both countries. In United-States, a positive credit shock leads to an increase in employment and vacancies, while in Germany the opposite eect is obtained for employment and vacancies, even if the impact on vacancies is insignicant. A common view widespread today is to consider that more credit in one economy will be the source of better labor markets conditions as it eases external nancial constraints. My empirical results suggest that this view can be challenged and discussed as an increase in the level of credit in an economy does not necessarily lead to a better conditions on labor markets. Finally, a credit shock has a quite strong positive impact on output in United-States, whereas this impact is also positive for Germany but weaker and not signicant, consistent with the idea that credit conditions is not sucient to improve economic situations in this country.